President Biden’s new rules for power plants that will be released soon would benefit carbon capture and sequestration technology by enabling coal and natural gas plants to meet the new proposed standards developed by the Environmental Protection Agency (EPA). However, the EPA is lagging far behind on permits allowing for the construction of the new technology. The new regulation is one of a series of regulations toward implementing Biden’s goal of cutting carbon emissions in half by 2030. The new rules on existing and new coal and natural gas plants are set to be imposed as dozens of carbon capture and sequestration projects await approval by the EPA, stalling construction and stifling investment. The backlog has delayed projects and frustrated states and industry officials seeking to build the new systems, and calls into question whether the Administration actually wants to deploy the technology.
In order to store captured emissions underground at scale, companies need to sequester the carbon at so-called carbon capture injection wells, or Class VI injection wells. The EPA has been slow-rolling the approval of these wells. In an effort to circumvent the slow approval, states have sought to secure their own permitting authority, known as “primacy,” to expedite the process. Yet here, too, applications have not been approved at the EPA’s offices. There are currently more than 70 outstanding Class VI permit applications across eight states. According to an EPA report, a massive scale-up of carbon capture technology at U.S. power plants could become a $600 billion industry by 2050, but permits are needed to do so.
So far, North Dakota and Wyoming are the only states that have been granted primacy, and both approvals came under the Trump administration. North Dakota has attracted key projects and investments, including $250 million for the largest carbon capture project in the world, expected to operational by early 2024. Arizona, Louisiana, Texas, West Virginia, and Pennsylvania have applications pending, while many more states have expressed interest.
The new rules that EPA is about to impose on natural gas and coal plants are meant to eliminate them entirely—fossil-fuel driven technologies that generated 60 percent of the nation’s electricity in 2022. The cost and difficulty of implementing carbon capture technology will make renewables like wind and solar a more attractive energy source for power plants, resulting in utilities building them instead. However, wind and solar will make the grid unreliable and electricity more expensive. Wind and solar are weather-dependent, generating electricity only when the wind blows and the sun shines and requiring very expensive battery back-up when they do not produce electricity.
Biden’s Inflation Reduction Act provides taxpayer funding to encourage carbon capture, utilization, and storage projects. The law expanded the availability of tax credits for carbon capture and storage and increased the credit amounts. The tax credits are now worth up to $85 for every ton of carbon dioxide captured, up from a maximum of $50 previously. The president’s bipartisan infrastructure bill, now a year old, also provided money to the EPA to help administer the permitting process.
Background on Carbon Capture and Sequestration Technology
Electric utilities have in the past found it difficult to capture large amounts of the carbon dioxide from coal- and gas-fired power plants, particularly since the technology is expensive and requires large amounts of electricity to operate. In the 2010s, several early projects partly funded by the federal government were abandoned because of the high costs. Only one coal plant in the United States ended up using carbon capture on a large scale: The $1 billion Petra Nova facility in Texas, completed in 2017. It sold the captured carbon dioxide to oil drillers who injected it into oil fields to extract more oil. That facility shut down in 2020, but its owners plan to restart it this year.
Canada’s Saskatchewan’s state-owned electricity provider has a $1.3 billion, 110 megawatt coal plant with carbon capture technology. The Boundary Dam power plant traps 90 percent of the plant’s carbon dioxide, pumping it underground and then selling it to the Cenovus oil company for use in priming nearby oil fields or burying it in geological formations.
The higher tax credits in the Inflation Reduction Act, however, have increased interest in the technology. The owners of at least six coal plants and 14 large gas plants are conducting detailed engineering studies to gauge the economic feasibility of carbon capture and storage. Calpine Corporation, one of the country’s largest generators of electricity from natural gas, is exploring plans to install the technology at four large gas plants in Texas and California. Since the federal tax credit will not be enough to cover the cost of capturing carbon from the gas plants, the company is exploring other potential sources of financing.
A recent study by Rhodium Group, an energy research firm, estimated that only about 20 gigawatts of coal and natural gas plants would likely install carbon capture by 2035 — a small fraction of the almost 700 gigawatts of coal and gas that exist today, mainly because of cheaper alternatives from wind and solar projects. Those intermittent renewables, however, require expensive batteries as backup, which are heavily subsidized in the Inflation Reduction Act, along with wind and solar plants. Consumers and taxpayers are struggling to pay for the costs associated with reducing carbon dioxide emissions, which are escalating with exotic new methods of generation prescribed by government policies.
Despite that forecast, carbon capture might be a more attractive option in parts of the country where it is difficult to build new wind and solar power because of a lack of wind or solar resources, insufficient power lines or community opposition. Options for backing up renewable energy, such as advanced batteries, might not pan out. And some states like Wyoming have expressed interest in encouraging their utilities to use carbon capture technology in order to maintain a market for fossil fuels. It also might prove easier to modify existing natural gas plants so that they can run entirely on hydrogen fuel from renewables.
If this EPA rule is implemented and can withstand legal challenges, carbon capture technology is more likely to be used at industrial facilities, such as at hydrogen or ethanol plants, where it is often technically easier to capture carbon dioxide and there are fewer alternatives for cutting emissions.
Conclusion
Despite the rampant growth expected for wind and solar facilities, the electric grids of the future will need electricity sources that can run on demand at all hours to complement their intermittency. Carbon capture technology could allow coal and natural gas-fired plants to provide that service if EPA is successful in implementing its proposed regulation on power plants. But, while the EPA is proposing CCS technology, the agency is delaying the approval of permits that would allow the necessary R&D to move the technology forward. This is not unlike the administration’s opposition to critical metal mining projects in the United States at the same time it pushes policies designed to rely much more on minerals necessary for green energy initiatives. It seems that the Biden administration does not want Americans to have a reliable energy grid and is doing all it can to make electricity more expensive for Americans as electricity rates have already risen with solar and wind’s forced entry into the market.
